Transformation in bankingby
Team DNA | Saturday, 29 September , 2007, 11:47http://sify.com/finance/fullstory.php?id=14535353
The article talks about the global economy in the banking industry, especially in India. Due to the increase in competition, many banks have started to work on chancing delivery channels and their quality of service. This also means to lower costs and to keep the pressure on other banks to adopt state-of-art technology. Privet companies where the first to take advantage over the use of technology then the public sector banks, also known as PSBs.
PSBs used to be known for their rising operating costs, mounting NPAs (Non-Performing Assets), declining profits and unfriendly customer. Now however, with the use of technology, they have been able to be more competitive and revamp the relations with their customers by making them friendlier to use. In India, almost 75% of the financial sector is made up of banking services which plays an important role in the economy. These improvements as M B M Rao, CMD, Canara Bank opines, "Indian banks have emerged stronger in terms of profitability, asset quality and bottom-line growth. Several balance sheet and profitability indicators of the Indian banking sector have inched closer to the global benchmarks. The adoption of international best practices in crucial areas such as prudential norms, capital adequacy, banking supervision, data dissemination and corporate governance have together enhanced the strength and resilience of the Indian banking sector."
Since technology was the driving force for change in the banking sector. Banks now can offer more, such as investment banking, insurance, credit cards, depository services, mortgage financing, securitization, and many other areas. Technology as allowed the consumer to have a larger amount of choices and information at their disposal. PSBs also offer ATMs, internet banking, D-MAT, and plastic money to help there customers access their accounts. The private sector however began to focus more on retail banking and trying to offer better products and make a better financial automation system to increase there customer service. So the future may hold that private banks may buy out some PSBs someday.
Overall the article is mostly about how technology helped increase customer services and appeal of banks through out India. It was also discussed that in the year 2010, the IBA predicted that total deposits in to banks in India will increase from Rs 10,676 to 3,500,000 crore. They believe this will happen because banks in India are striving to meet globally accepted norms for capital adequacy.
4 comments:
Phil,
This is a very interesting article. It really goes to show how much technology has advanced economies around the world, particularly in the area of finance (or in this case banking). Very interesting!!
look at the comments for Mike's article. We seem to have a class trend as we look at the development of banking services in developing nations- this is a very critical global issue. where do you think the funding and the "no-how" will come from to support these initiatives? World Bank and other NGOs? Microfinance firms? consider the influence of Nobel Prize winner Amartya Sen for his economics work in the areas of poverty.
Phil-I thought your article was very interesting. After reading the article I was wondering if US banks might adopt PBS. In addition, I was wondering what type of technology challenges will we face in the future? Great article.
Interesting article Phil. It seems that technology is playing a big role in banks and the economy, especially that I didn’t know that a lot of these advantages are happening in India.
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